MONEYVAL: Cyprus is not doing enough to combat money laundering

The Council of Europe’s anti-money laundering (AML) body MONEYVAL has urged Cyprus to be more aggressive in its efforts to combat criminal transactions.

MONEYVAL also called for Cypriot authorities to take a more proactive approach to the freezing and confiscation of foreign proceeds.

The call for action comes on the back of a new report about Cyprus’s (AML) and counter-terrorism financing (CFT) efforts. The report essentially found those efforts to be lacking in its compliance to recommendations made by the Financial Action Task Force (FATF).

While the report stated that Cypriot authorities have a passable understanding of the money laundering and terrorist financing risks that Cyprus’ ecosystem faces, it noted that there is a need for considerable improvements.

MONEYVAL stated that competent authorities are not yet sufficiently pursuing money laundering from criminal proceeds generated outside of Cyprus, which the body said posed the highest threat to the Cypriot financial system. Moreover, they have not been very proactive at freezing and confiscating foreign criminal proceeds at their own initiative, although they have been instrumental in assisting other countries.

Moreover, MONEYVAL concluded that Cyprus has failed to conduct a formal assessment of risks posed by legal persons, despite having a developed company formation and administration sector. The result of this, according to the body, is that the authorities’ ability to implement more targeted mitigating measures to ensure the transparency of legal persons had suffered.

The authority also noticed wide-ranging weaknesses in the implementation of preventive measures by the trust and corporate services sector as a whole.

MONEYVAL also noticed that the risk for money laundering and terrorism funding in the real estate sector had massively increased. The cause of this was because the real estate industry had  become the preferred choice of investment to acquire citizenship under the Cyprus Investment Programme.

Based on the results of its evaluation, MONEYVAL decided to apply its enhanced follow-up procedure and invited Cyprus to report back at its first plenary in 2021.

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